Financial advice for new fathers

Each year when Father’s Day rolls around, I’m reminded that I wouldn’t trade the experience of raising my two kids for the world. But when I think back to how naïve my wife and I once were about the costs of raising children, I can’t help wishing we’d been better prepared.

If you’re a new dad, or about to become one, you’d better sit down. According to the U.S. Department of Agriculture, a typical middle-income family can expect to spend over $241,000 to raise a newborn child until age 18 – and that doesn’t even include prenatal care or college costs.

Right now, you’re probably more worried about getting enough sleep than funding your retirement. But at some point, you’ll need to plot out a financial roadmap to ensure your family’s future financial security. As one dad to another, here are a few strategies I’ve learned that can help:

Start saving ASAP. It’s hard to save for the future when your present expenses are so daunting, but it’s important to start making regular contributions to several savings vehicles, even if only a few dollars at a time:

* Establish an emergency fund with enough cash to cover at least six months of living expenses. Start small by having $25 or $50 a month deducted from your paycheck and automatically deposited into a separate savings account.

* Even if retirement is decades away, the sooner you start saving and compounding your interest, the faster your savings will grow. If your employer offers 401(k) matching contributions, contribute at least enough to take full advantage of the match.

* Once those two accounts are well established, open a 529 Qualified State Tuition Plan to start saving for your children’s education.

If funding these accounts seems impossible, look for a few luxuries you could cut from your budget for six months – lattes, eating out, premium cable, etc. After six months, evaluate whether they were actual “needs” or simply “wants” you can live without.

Get insured. If your family depends on your income, you must be prepared for life’s unexpected events, whether an accident, illness, unemployment or death. Get adequate coverage for:

* Health insurance. Everyone needs medical insurance, no matter how young or healthy.

* Homeowner/renter’s insurance. Don’t let theft, fire or another catastrophe leave your family without a home or possessions. To reduce premiums, consider choosing a higher deductible.

* Life insurance. You’ll probably want coverage worth at least five to 10 times your annual pay – more, if you want to cover college costs. And don’t forget to insure your spouse’s life so you’ll be protected as well.

* Disability insurance. Millions of Americans suffer disabilities serious enough to miss work for months or years, yet many forego disability insurance, potentially leaving them without an income after a serious accident or illness. Ask about your employer’s sick leave and short-term disability benefits and if long-term disability is offered, consider buying it.

* Car insurance. Almost every state requires insurance if you own or drive a car, and for good reason: It protects you financially should you cause an accident or be hit by an uninsured driver. Make sure you have sufficient liability coverage to protect your net worth and income – it only takes one serious accident to wipe out your

savings.

And finally, spend responsibly. If you buy things you don’t really need or can’t afford, you’ll just end up having to work longer hours to pay for them – time you could have spent watching your kids growing up.